Do hiring goals still matter? Yes, especially if building a racially equitable and inclusive workplace is the goal

The Racial Equity Dividends Index (Index) is a comprehensive analytical tool developed by the Center for Economic Inclusion that helps businesses measure their progress toward building a racially equitable and inclusive workplace. This post explores the research behind the standards in the Index, and how implementing these policies and practices can help close the racial wealth gap in Minnesota.

Shoreé Ingram

By Shoreé Ingram,
Managing Director, Employer Services and Consulting

In 2022, just 35% of companies participating in the Racial Equity Dividends Index indicated that they set enterprise-wide goals for hiring, retaining and advancing Black, Indigenous, Hispanic, and Asian people in their organizations.

This racial equity standard is one of the most important ways that companies can make real structural change in their organizations. A key lever for this permanent structural change is organizational responsibility—when leaders take responsibility for reaching these goals.  

Studies have found that setting specific goals for hiring, retaining, and advancing workers of color is a highly effective strategy for increasing the racial diversity of an organization’s workforce, especially for management-level roles. This practice has a stronger demonstrated impact on workforce diversity than efforts to create mentorship networks or trainings to reduce bias and discrimination.

While setting the goal is the first step, creating shared accountability across the organization toward achieving these goals is the immediate second.  

What Gets Measured, Gets Done

Companies need to have mechanisms in place not just for measuring progress, but for supporting and holding leaders accountable for developing, implementing and resourcing those anti-racist strategies, and actions needed to achieve goals.

Here are three examples of racial equity standards companies can incorporate into goal setting:

• Hiring, retention, and advancement questions in managers' annual performance evaluations.

• Holding specific strategy sessions with managers on a quarterly, biannual, and annual basis to review progress.

• Offering performance bonuses to managers based on their success in meeting hiring, retention, and advancement goals.

Goals combined with resourced action plans with clear accountabilities will achieve and sustain positive organizational change critical to a racially equitable and inclusive workplace.

Companies increasingly understand the benefit of goal setting to increase racial and ethnic diversity in their organizations and cite research that shows commitment in practice to racial equity and inclusion positively shapes perceptions of culture and work environment for all employees.

Research also shows that companies with teams made up of diverse backgrounds not only benefit from improved financial performance, but are more innovative, able to evolve to meet current market demands and compete in a global economy. This study cited diverse teams are more likely to challenge ideas and rely closely on facts with less likelihood of mistakes or errors. 

Maintaining the Commitment 

While setting goals, and putting action and accountability plans in place are critical, companies need to also maintain this commitment not just during times of stability or growth, but when grappling with economic downturns. Historically during economic downturns, including from 2019 to 2020, Black and Brown workers are too often the first to be laid off or fired, and the last ones hired.

A company and our region’s commitment to racial equity and economic inclusion must be centered in an understanding and commitment to what data has already showed us: we all benefit when we are all included and able to fully participate in our economy.  

Do hiring goals still matter? Yes! Set those goals and be accountable for measurable progress toward a racially equitable and inclusive workplace where every employee thrives .

The Center is ready to help you kick-start and achieve your hiring goals through participation in the 2023 Index. Let’s build!

To learn more about how your company can use the Index to build enterprise-wide goals for hiring, retaining and advancing Black, Indigenous, Latino, and Asian people in your organization, register online by February 24. 

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How the Racial Equity Dividends Index Helps Companies Build Racially Equitable and Inclusive Workplaces

Index Registration Open Through March 8

In January 2021, the Center for Economic Inclusion (Center) launched the first-ever Racial Equity Dividends Index (Index), a comprehensive analytical tool to help companies assess how their current policies and practices position them to win on racial equity and advance business goals, while also identifying opportunities for improvement. Since then, more than 100 public and private organizations have used this assessment to navigate their efforts to close racial wealth gaps.

We sat down with Nathan Arnosti (Director of Analytics and Index project lead) to talk about the Index, now open for registration through March 8.

Nathan Arnosti

What is the Index?

(Nathan) The Racial Equity Dividends Index (Index) is an analytical tool designed to support private-sector businesses in their journeys to build racially equitable and inclusive workplaces. The Index offers companies an intuitive, comprehensive, and measurable roadmap for progress on racial equity.

How can my business register for the Index?

(Nathan) First, eligible companies – currently, all private-sector organizations with offices in Minnesota – register online for the Index at the Center’s website. Then, once registration closes on February 24, registered businesses will receive the 2023 Private Sector Index survey and have approximately four weeks to complete it.

What information is gathered through the Index survey?

(Nathan) Through a series of multiple-choice questions, the survey asks companies to report their progress against 43 racial equity standards spanning seven dimensions of company operations, such as hiring, procurement, leadership, and products and services. It also provides companies the opportunity to gather and share data on workforce demographics and supplier spending.

What happens next?

(Nathan) The survey responses inform two sets of analytical Index products that are delivered to participating companies. First, participants receive a customized score report that provides their full answers alongside peer comparisons and recommendations developed by the Center for Economic Inclusion, so that companies can learn what their strengths are and where opportunities lie. Next, companies are included in the Racial Equity Dividends Index Report that aggregates responses across companies, identifying trends, elevating promising practices and case studies, and celebrating leading employers in each category. The 2022 Index report is available on our website.

Why is it important for companies to participate?

(Nathan) Spurred by the murder of George Floyd by Minneapolis police officers and the largest protests in American history in 2020, businesses pledged to reshape existing practices and committed record-setting investments in historically disadvantaged Black, Indigenous, Hispanic, and Asian communities.

At the same time, we know that businesses often lack a roadmap for what racial equity can look like or clear standards against which to measure their actions. They also have very limited information about how their actions compare to peers.

The Index is a tool designed to meet these needs – to help companies make tangible, durable progress towards building racially equitable and inclusive workplaces that drive innovation, productivity, retention, and belonging.

Who is the target audience?

(Nathan) We’ve designed the Index for all private-sector companies in all industries. In our experience, companies with at least 50 employees find the Index most valuable.

In 2022, companies of all sizes participated in the Index -- executive recruiting firms with fewer than 100 employees, to manufacturing companies with several hundred or thousand employees, to Fortune 500 companies, like Best Buy or 3M.

This Index offers companies the opportunity to learn from one another, regardless of sector or size, and I see that as a key part of its value. Participating companies were particularly compelled by the opportunity to assess their results alongside similar employers in a customized sector report.

What were some of the biggest learnings from the Racial Equity Dividends Index?

(Nathan) We learned that there is a tremendous appetite among private-sector leaders for analytical tools that offer a clearly defined, measurable roadmap to build racially equitable workplaces. In its first year, 40 companies that collectively employ more than 200,000 Minnesotans participated in the Index, even though it was a novel and unprecedented initiative. We’re excited to connect with even more businesses to encourage them to participate and take advantage of the Index this year.

QUESTIONS

For more information about the Racial Equity Dividends Index, please see the registration page, FAQ page, download the Index brochure, or email us at index@centerforeconomicinclusion.

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Our $65 Billion Opportunity: How Investments in Racial Equity and Inclusion Will Impact Communities and the Economy for the Better

Isaac Russell

By Isaac Russell, Director of Public Policy

On January 24, Governor Tim Walz made national headlines with his proposed $65 billion 2024-2025 fiscal biennium budget, the largest in Minnesota history. The Governor understands that addressing the state’s economic, social, and infrastructure needs on this scale requires big money. The state’s unprecedented $17.6 billion budget surplus will also come into play.

This is our moment -- Minnesota’s once-in-a-generation opportunity to chart and build a racially equitable, inclusive, and sustainable path forward that has rippling impacts on the state’s families and economy for years to come.

Policy Leadership
While I’ve led the Center’s public policy for just over a year, the organization has had a strong presence at the Capitol for nearly five. Bold social and economic policy change requires tenacity, strategy, and partnerships.

What I can also tell you is this: There has never been a better time for initiatives that have a strong racial equity component than right now. And with this unprecedented amount of money, I urge organizations that are doing racial equity work to offer solutions that are more systemic in nature.

New Day Dawned
As I walk the capitol corridors, the change in the air is palpable. It’s a powerful thing to witness leadership of color in both chambers shaping and passing legislation that prioritizes the experiences of and impacts to Black, Indigenous, Latino, and Asian communities in new ways.

Less than two months into session, this momentum has already resulted in significant policy change. The CROWN Act signed into state law. Juneteenth designated as a state holiday. Plus, there are proposals to establish new offices that prioritize Black health and missing and murdered Black women.

This is what progress and momentum looks like. My responsibility to lobby for the Center’s public policy priorities – Racial Equity Impact Notes, $10 million direct appropriation for job creation, and increasing the state procurement and preference equity cap -- is made easier by the partnerships there now that weren’t in previous years. We are strengthening relationships and forging new ones.

There is no time to waste. Let’s get into it.

$65M Budget Highlights
Here’s a budget breakdown of what I see as key investments towards a more racially equitable and inclusive state.

1. Investments focused on employment, wages, and wealth-building in Black, Indigenous, Latino, and Asian communities. This includes targeted investments in small business supports, workforce programs, and homeownership that recognize and address historic and systemic disinvestments and barriers that have hindered Minnesota’s economic competitiveness.

2. Investments in businesses along commercial corridors. Examples: the $85 million proposed funding to the Mainstreet Revitalization Fund along with funding for Small Business Navigation Program, Small Business Development Centers, and the Small Business Partnerships Program are critically important to creating jobs, building wealth, and growing our economy.

Through these programs, we hope to see increased coaching, access to flexible capital like forgivable loans, and small business consulting. We also need to ensure these programs have a strong racial-equity orientation with significant outreach to minority-owned businesses.

3. Advancing racial equity in Minnesota’s workforce. The Governor’s budget aims to increase family sustaining wages for Black, Brown, and Indigenous workers by recommending $60 million in training and employment services for workers traditionally overlooked.

4. Emphasis on developing workforce opportunities for family sustaining wages, which is one of the metrics we use to evaluate if our economy is racially equitable and inclusive.

5. Proposed funding for increasing home-care workers’ rates. This action would provide an increase to over 20,000 workers statewide. We define a living wage as a worker who earns at least $39,795 annually, of which only 49 and 44 percent of Black and Hispanic workers earn, respectively.

6. Expansion of the Child Tax and Dependent Credit. Estimates show this would help roughly 100,000 households with child-care costs. Families that earn less than $200,000 could get up to $4,000 if they have one child, $8,000 for two, and $10,500 for three. A child tax credit for lower-income Minnesotans could give families $1,000 per child, up to $3,000.

7. $1 billion expansion of housing funding. This amount includes funding for rental assistance, workforce and affordable homeownership, assistance to those facing homelessness, and workforce housing.

While $1 billion is a large number, even more is needed. The Twin Cities alone faces a housing shortage of at least 45,000 affordable units. This number does not take into account the struggles of families trying to purchase their first home. While there is some funding for the construction of affordable homes and home down-payment assistance, we know more resources are needed.

Committing to the Long Term

While the Governor’s budget makes historic investments in Minnesota and includes a strong equity component, we know that racial equity and inclusive growth will require sustained efforts across time and at different levels of government.

It will mean strong leadership to carry the work forward beyond the next two years and from one administration to the next to keep Minnesota moving forward for all Minnesotans.

We can do it.

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Center Applauds City of Saint Paul Actions to Address Historic Legacy of Wealth Extraction

Suzanne P. Kelly

By Suzanne P. Kelly, Chief of Staff

Home ownership not only establishes a sense of place, community, and stability but multiple studies show it has been the most effective intergenerational wealth building strategy Americans have known.

Yet 2023 research published by the California Housing Finance Authority, suggests that discriminatory housing practices such as redlining, racial covenants, and predatory lending has disproportionately kept Black families from owning homes at the same rate as their white peers.

In Minnesota, 77.5 percent of whites own their own home, compared to just 30.5 percent of Blacks; the 5th worst homeownership gap in the United States. Not surprisingly, that gap corresponds to an equally abysmal wealth gap among Black and White Minnesotans. 

One need only look to St. Paul for a relevant example of legally sanctioned government actions that resulted in disproportionate harm to Black residents.

From 1956 to 1968, local and state leaders seized by eminent domain, land upon which  hundreds of Black-owned homes, and businesses in St. Paul’s Rondo neighborhood sat, in order to construct a new interstate corridor. At the time nearly 80 percent of St. Paul’s Black residents lived in the Rondo neighborhood.

Björgvin Sævarsson, founder and CEO of the Yorth Group, reports that “over 700 homes were lost to I-94. Along the way, the ecosystem for the previously thriving local [Black] economy was destroyed with many businesses closing as a result.”

Sævarsson determined that the intentional routing of I-94 through the heart of Rondo resulted in a loss of at least $157 million by 2018 in intergenerational wealth being passed down from homeowners to their children and grandchildren.

Rondo is just one local example of legally sanctioned, post-slavery actions taken across the United States that have left a legacy of Black exclusion educationally, socially and economically.

Efforts to repay Black Americans for their decades of loss have rarely gained traction. But on January 4, 2023, the Saint Paul City Council voted to establish the Saint Paul Recovery Act Community Reparations Commission. 

The ordinance, which takes effect on February 13, 2023, establishes a commission that will recommend ways for the city to make reparations to Black residents whose ancestors were enslaved.

The vote came two years after the City apologized, for its role in “systemic discrimination […] perpetrated through redlining and racial covenants, access to housing, environmental injustice and the removal of St. Paul’s Rondo neighborhood (Gray, 2023).”

These efforts also follow the adoption of the 2021 Ramsey County Inclusive Economic Competitiveness & Inclusion Plan, which endorsed significant local and county housing investments and acknowledged the historic policies that extracted wealth from Black families, necessitating courageous policies to catalyze systemic equity building.  

The Center commends the actions of policymakers to address the wealth, unity, and community taken from the residents of the Rondo community. The multi-generational effects of the United States highway system on Black communities can truly never be measured, but our actions to repair the harms must begin now.  

• Learn more about the Center for Economic Inclusion’s work with Ramsey County, the City of Saint Paul and others to disrupt and dismantle systemic racism and bias to construct and sustain an inclusive, equitable and growing regional economy for all here 

• Learn more about the Saint Paul Recovery Act Community Reparations Commission here. 

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What’s New: Introducing the 2023 Racial Equity Dividends Index for the Private Sector

Nathan Arnosti

By Nathan Arnosti, Director of Analytics

A year ago, the Center for Economic Inclusion launched the inaugural Racial Equity Dividends Index (Index). The Index surveys participating companies on their policies and practices related to 43 Center-identified racial equity standards that span seven dimensions of company activity.

Participating companies receive customized score reports that help them assess their strengths and opportunities on racial equity, understand how they compare to peers, and chart a roadmap for further action. Additionally, a public Index report identifying high-scoring businesses, trends, and case studies is published on the Center’s site as a free resource for companies.

Forty companies of all sizes – from Fortune 500s to enterprises with fewer than 100 employees, and collectively employing more than 200,000 Minnesotans – participated in the Index last year. With the results of this index in-hand, these organizations have used their unique results to focus their efforts to drive racial equity forward within their organizations.

The Center offers the Index to companies on an annual basis. We believe that to sustain excellence, the Index must adapt to reflect new research and thinking on standards that best advance racial equity within companies.

These are several of the questions that the upcoming 2023 Racial Equity Dividends Index for the Private Sector seeks to answer:

• How many businesses in Minnesota no longer use a new hire’s salary history to determine their salary?

• Do businesses provide hourly workers with consistent schedules and the ability to work full-time?

• Does your organization measure the racial diversity of its Tier 2 Suppliers (your suppliers’ suppliers)?

What’s new in 2023

After we published the 2022 Index results last June, I led a team of Center colleagues to revisit and re-evaluate our racial equity standards. Integrating feedback we received from participating companies, new research which included the Center’s own research on racially equitable procurement and policymaking practices, and emerging models from racial equity practitioners,  the 2023 Index offers the following additions:

New sections to collect data on racial equity outcomes at your organization. In these sections, participating companies report on critical datapoints related to their workforce and supplier diversity, including: 

• Racial demographics of their workforce at different levels, including senior leadership, supervisors, all full-time staff, and all part-time staff;

• Number of workers by race who earn family-sustaining wages, are hired, receive promotions, and depart; and

• Number of and total investment in Black, Indigenous, Hispanic, or Asian-owned suppliers.

These sections will not count towards an organization’s score, but we believe they will provide invaluable insight into baseline outcomes of participating companies compared with peers, which will be shared with each organization in their confidential Index score report

Seven new racial equity standards. Our team has developed new standards related to the use of salary histories during hiring processes, protocols to ensure that Black, Indigenous, Hispanic, and Asian-owned businesses are considered in requests for proposals, corporate transparency around lobbying efforts, and more. We believe these new standards will shed new light on the opportunities for building – and benefitting from – racially equitable workplaces.

Revisions to several existing Index standards. Based on feedback we received from participants, new research, and an analysis of 2022 results, we’ve revised a handful of standards so that they offer clearer, more compelling insights. The 2023 Index gathers more specific data on the action businesses take to reduce bias within the application process, benefits they offer their employees, and efforts to provide antiracist training to employees. We’re excited to share these revised standards with participating companies in the 2023 Index survey.

We believe the 2023 Racial Equity Dividends Index is the tool that companies need to strengthen and deepen their existing efforts to build racially equitable and inclusive workplaces – and benefit from the innovative ideas, increased productivity, improved retention, and higher satisfaction and engagement that can result.

The updates we’ve made to the Index over the past six months further strengthen its value. Dismantling racially inequitable systems and building organizations and economies that benefit all of us is a daunting undertaking. With tools like the Index to support and accelerate the efforts of dedicated leaders within organizations, we believe that progress is possible.

Registration for the 2023 Racial Equity Dividends Index for the Private Sector is open now through February 24. Don’t miss this opportunity to participate! bit.ly/2023-Index

Please see our FAQ page for additional information about the 2023 Racial Equity Dividends Index for the Private Sector and direct any questions about the Index to index@centerforeconomicinclusion.org.

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